Brian Armstrong, CEO and Co-Founder, Coinbase, speaks throughout the Milken Institute Global Conference on May 2, 2022. in Beverly Hills, California.
Patrick T. Fallon | AFP | Getty Images
Coinbase shares closed down greater than 8% Monday, extending a slide that is pushed the crypto exchange to its lowest point since its market debut in April 2021. The drop comes as bitcoin’s slump continues and investors worry about contagion from FTX’s spectacular collapse earlier this month.
Nineteen months after going public with a market cap of over $85 billion, Coinbase has fallen below the $10 billion mark and has lost over 1 / 4 of its value previously 4 trading sessions.
Questions have been swirling concerning the health of FTX’s rival exchanges, sparking industrywide sell-offs which have caused some firms to temporarily suspend trading, and others to arrange potential bankruptcy filings. Mizuho analysts wrote in a note on Friday that day by day volumes within the industry are trending 30% to 40% below their average for the yr.
Coinbase CEO Brian Armstrong said in an op-ed for CNBC on Nov. 11 that his company doesn’t have “any material exposure to FTX,” but that he has “sympathy for everybody involved.” Coinbase shares are down greater than 83% yr up to now.
“It’s stressful any time there’s potential for customer loss in our industry, and numerous individuals are losing numerous money consequently of FTX’s struggles,” Armstrong said.
Bank of America downgraded Coinbase on Friday, citing “contagion risk” for the cryptocurrency exchange platform, even when it shouldn’t be “one other FTX.”
“That doesn’t make them immune from the broader fallout inside the crypto ecosystem,” wrote Bank of America’s Jason Kupferberg.
Prior to FTX’s descent, the market was within the midst of a crypto winter that had sent prices of bitcoin and ethereum tumbling and compelled various firms out of business. Earlier this month, Coinbase reported a revenue plunge of greater than 50% within the third quarter from a yr earlier, and a lack of $545 million. In June, the crypto exchange slashed 18% of its workforce.
The next sell-off has been much more extreme, with bitcoin falling greater than 3% on Monday to its lowest level in over two years, and ethereum off over 6%. Solana, a coin that was touted and backed by FTX founder Sam Bankman-Fried, has lost over two-thirds of its value in two weeks.
In a matter of days, FTX went from a $32 billion valuation to bankruptcy as liquidity dried up, customers demanded withdrawals and rival exchange Binance ripped up its nonbinding agreement to purchase the corporate. FTX filed for Chapter 11 bankruptcy protection Nov. 11.
Bankman-Fried said the corporate’s assets were “tremendous” two days before he was desperate for a rescue. He has since said in tweets that he’s attempting to recuperate deposits for the corporate’s customers.
WATCH: CNBC’s full interview with Coinbase CEO Brian Armstrong